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CBN Sets N5bn Capital Base For Payment Service Banks

CBN Governor, Godwin Emefiele

The Central Bank of Nigeria (CBN) has set a capital base of N5billion for Payment Service Banks (PSBs) to operate in the country.

This was contained in a circular signed by the bank’s director, financial policy and regulation department, Kevin Amugo.

The circular noted that the guidelines for licensing and regulating PSBs in the country were reviewed in response to market developments.

With N5billion capital, the circular said, PSBs are to operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25 per cent financial service touch points.

The structure, according to  CBN, allows them to enter into direct partnership with card scheme operators which would not be eligible for foreign currency transactions, deploy ATMs and Point of sale devices in some of these areas as well as operate through agents.

According to the circular, “permissible operations of the technology driven banks include accepting deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittances (including inbound cross-border personal remittances) through various channels within Nigeria; sale of foreign currencies realised from inbound cross-border personal remittances to authorised foreign exchange dealers amongst others.

The revised guidelines was to expand the scope of companies that could apply for the license to switching companies.

The initial guidelines released in November 2018 had restricted switching companies which already have record/data of the financial system operators from establishing a PSB to avert conflict of interest.

However, switching companies have been included in the list of eligible promoters in the reviewed guideline.

Other eligible promoters of PSB allowed by the guideline include; telecommunications companies, financial holding institutions, financial technology companies, mobile money operators, financial technology companies, banking agents as well as retail chains.

PSBs were introduced in 2018 as part of efforts to deepen financial inclusion in the country. The CBN, in the circular, said in view of the challenges to effective outreach to rural communities as well as the need to complement the services provided by other licensed entities, it issued the regulation to provide for the licensing and operations of PSBs in Nigeria.

PSBs are expected to leverage on mobile and digital channels to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services.

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